Rapaport Magazine
Big Box Chain Retailers


901 W. Walnut Hill Lane
Irving, Texas 75038
CEO: Theo Killion
Chief Administrative Officer: Matthew W. Appel
Fiscal 2012 Sales: $1.87 billion
Fiscal 2012 Loss: $27 million
Advertising Spend
   While Zales did not highlight its marketing budget for its 2012 fiscal year, it was included in its overall selling, general and administrative (SG&A) costs, which grew around 5 percent to $902.3 million for the fiscal year, partially due to an increase in advertising spending. The budget for the company’s marketing effort is also set to grow over the next year because increased and effective marketing is one of Zales’ strategic focuses for fiscal 2013.

   Zales is a fine jewelry retailer that, as of July 31, 2012, operated 1,124 jewelry stores and 654 shopping mall kiosks in the U.S., Puerto Rico and Canada. Zales stores operate under five brands — Zales Jewelers, Zales Outlet and Gordon’s Jewelers in the U.S. and Peoples Jewellers and Mappins Jewellers in Canada. The company’s kiosks operate under Piercing Pagoda, Plumb Gold, and Silver and Gold Connection.
   Aside from a wide selection of diamond, gemstone and precious metal jewelry, Zales also offers credit and jewelry insurance services through its subsidiary Zale Indemnity Company, Zale Life Insurance Company and Jewel Re-Insurance Ltd.
   In a letter to shareholders, CEO Killion praised Zales for regaining its financial footing after a few hard years of losses brought about by the economic downturn, and noted that growing revenues is the company’s main focus over the next year. “During fiscal 2012, we continued to make significant progress and achieved several key milestones. While we have set the stage to return to profitability in fiscal 2013, creating value over the long term will continue to take hard work, focus and dedication. Our team is ready and is excited about the opportunities that lie ahead.”

   In fiscal 2012, around 50 percent of the company’s sales came from bridal purchases, while the majority of its sales— around 60 percent — came from its Zales Jewelers stores, which focus on diamond jewelry, with a strong emphasis on bridal and fashion segments, and its Gordon’s Jewelers stores, which, along with diamond jewelry, also sell watches, gemstones and gold jewelry. Over the fiscal year, these two branded outlets had an average transaction value of $426, second only to the Zales Outlet stores, which sell a variety of watches, gemstones and gold and diamond jewelry, and had an average transaction value of $469.
   The company’s Canadian stores similarly focus on selling a wide variety of gemstone, watch, gold and diamond jewelry, though their price points are lower than that of their American counterparts. In fiscal 2012, for example, the average transaction value for People’s Jewellers and Mappins Jewellers was $332.
   Zales’ most affordable retail segments are its mall-based kiosks, which it describes as being focused on the “opening-price-point jewelry guest” by offering a variety of inexpensive 14-karat and 10-karat gold chains, nonprecious metal products and affordable silver and diamond jewelry. The average transaction value at Zales’ kiosk locations was $43 in fiscal 2012.
   Zales certifies that all of its diamonds and jewelry meet the highest standards with its Vendor Code of Conduct, which requires its suppliers to adhere to national labor and environmental laws, as well as international labor and human rights agreements. The code also prohibits the use of forced labor, child labor or any type of punishment or abuse that impedes a workplace’s safety, and requires Kimberley Process Certification Scheme warranties for all products. 

Article from the Rapaport Magazine - June 2013. To subscribe click here.

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